How this decision by Nigerian manufacturers deepens the hole in your pocket
A credible threat facing households comes from manufacturers also feeling a sting in their operations because of a weakened Naira matched against the dollar.
It is a long road until households can live the positive projection coming from the Central Bank of Nigeria Governor, Olayemi Cardoso. At the Launch of the Nigerian Economic Summit Group (NESG) 2024 Macroeconomic Outlook Report last Wednesday, he imagined that the extra stressful burden that inflation has placed on household finance would soon fizzle out although inflation is not letting up.
Inflation won’t ease early enough before the prices of groceries start to go way up, further higher than what families have seen in recent times. This would be down to a price hike by the Manufacturers Association of Nigeria (MAN) if they go through with it.
As of Friday, 26 January 2024, the Nigerian Naira continued its downward fall when measured against the United States Dollar. On this day, the Naira’s depreciation against the dollar persisted at ₦1,420/$ in the parallel exchange market, hence the projection of an imminent increment in the price of goods.
Imports for now will still drive production in Nigeria even though the country has sort of loosened the grip of shipping in petrol that ought to have been locally sourced. When manufacturers need to make their goods, they still need to source raw materials abroad.
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Making the connection in a chat with Punch News was MAN’s president, Francis Meshioye. He took a blunt view of the consequences of the Naira enjoying no respite since a 2023-engineered devaluation that coincided with fuel subsidy removal.
It is a harsh time, which means we have to revise our strategy. It is hard for us to have a long-term plan, and even the short-term plans we have to regularly revise them so that we can incorporate the reality of the economy into it.
In Mr Meshioye’s insider’s outlook, the pinch of the Naira decline will pinch grocery buyers the more when the manufacturers pass the bill to them.
It is not possible to remain profitable with this exchange rate. The first challenge is breaking even. It means the prices of things will be higher, and the income is not there for people to buy things as they should buy as things become more expensive.
So, the demand will become low, and this will affect our bottom-line. The break-even point will become critical. So, what businesses should do is to ensure that they break even at this time. It is a critical and very challenging time for us, says MAN’s president.
At the NESG 2024 Macroeconomic Outlook Report launch last week, the Central Bank of Nigeria governor when delivering the keynote address was very optimistic despite the murmuring from Nigerians feeling like the rebuilding is taking so long.
— Central Bank of Nigeria (@cenbank) January 24, 2024
On social media are testimonies of the struggles that households daily confront to stay afloat and high above depressing inflation that is taking too much time to ease. The question that remains is how long they can endure multiple blocks from different directions hindering a match with sustainable income.
Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.
